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IRCTC share rises 53% in 10 sessions: Will the rally sustain?

IRCTC share price ended 5% or 59.70 points higher at Rs 1,253 on Thursday. It opened at the same price in that session.  The stock has risen 34.23% since the beginning of this year

Aseem Thapliyal | April 10, 2020 | Updated 18:52 IST
IRCTC share rises 53% in 10 sessions: Will the rally sustain?
IRCTC share hit its all-time high of Rs 1,995 on February 25

In a V-shaped recovery, IRCTC share price has gained over 53% since March 25 this year. The large cap stock had lost 57% from its all-time high till March 25.  On February 25, IRCTC share hit its all-time high of Rs 1,995. However, the stock fell to Rs 815 on March 25 after Indian Railways cancelled trains fearing spread of coronavirus pandemic.

On Thursday, the stock closed 5% or 59.70 points higher at Rs 1,253 on BSE.  It opened at the same price in that session. The stock has risen 34.23% since the beginning of this year. 

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Mumbai-based brokerage Prabhudas Lilladher is of the view that IRCTC is best placed to bounce back despite the near-term challenges, once coronavirus fears fade. The structural levers of the entity remain intact, the brokerage said.

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"The stock currently trades at 13.6 times FY22 EPS and looks attractive from a long-term perspective," the brokerage said in March 24 note on the stock. It maintained a 'buy' rating with a price target of Rs 1,656.

"However, we would advise staggered buying and do not rule out further weakness in the near term given the constantly evolving situation. Further, the risk of reduction or abolishment of service charge has magnified as Covid-19 is a Black Swan event and the government can take a socialist approach to deal with the crisis," it said.

Abhijeet Ramachandran, Founder and Trainer at Tips2trade said,  "Since there are very high chances that the national lockdown could be extended this month, barring consumer, food retail and pharma, all other sectors could see another round of correction sooner rather than later. Currently, IRCTC has strong support at 1,110. Any rally up to 1360-1400 should be used to exit or book profits. For long term, it remains a strong buy and hence investors should buy only near Rs 1,050-1100 levels."

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Before the slide, IRCTC share outperformed leaders across most sectors in the stock market. The stock rose 203% until February 25, 2020 compared to its listing price of Rs 644.

On October 14 last year, the Indian Railways firm made its stock market debut with IRCTC share listing at Rs 644 on BSE and Rs 626 on NSE. It delivered 511% returns compared to IPO issue price of Rs 320.

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